## Facts

- A creditor held a $15,000 default judgment and judicial lien against Brenda Jean Murphy and caused the sheriff to seize Murphy’s 1994 Cadillac to satisfy the judgment.
- Murphy filed a Chapter 13 petition and proposed a plan with $600 monthly payments to the trustee, paying the Cadillac’s first lienholder in full and treating the judgment lien as partly secured and partly unsecured.
- Murphy sought partial avoidance of the judgment lien.
- The creditor objected to confirmation and lien avoidance, arguing Murphy was not an “individual with regular income” eligible for Chapter 13 under 11 U.S.C. § 109(e).
- Murphy had lived with Sam Hambrick for about 11 years; she maintained their home and raised his children, and she had not worked outside the home for several years.
- For many years, Hambrick regularly deposited about $800 per month into Murphy’s account to cover her expenses, including the Cadillac loan.
- Hambrick executed an unconditional written commitment to provide funds sufficient to make Murphy’s $600 monthly plan payment, and evidence showed he was financially able to do so.

## Issues

1. Whether a debtor can be an “individual with regular income” under 11 U.S.C. §§ 101(30) and 109(e) when plan funding comes from an unconditional, financially supported commitment by a long-term cohabitant.

## Decision

- The court held Murphy qualified as an “individual with regular income” under § 101(30) and was eligible for Chapter 13 under § 109(e).
- The court overruled the creditor’s eligibility objection.
- The court permitted the Chapter 13 case and plan process to proceed, including consideration of partial lien avoidance consistent with the plan (subject to confirmation and other requirements).

## Legal Principles

- “Individual with regular income” under 11 U.S.C. § 101(30) turns on whether the income stream is sufficiently stable and regular to enable plan payments, not on whether the source is wages or employment.
- Chapter 13 eligibility under 11 U.S.C. § 109(e) is satisfied when the debtor can show reliable resources to fund plan payments, including nontraditional sources.
- Third-party contributions may constitute “regular income” when supported by credible evidence of consistent past support, a clear commitment to continue payments, and the contributor’s financial ability.
- Eligibility determinations are fact-specific; voluntary contributions that are speculative or intermittent may be insufficient, but long-standing economic interdependence and an unconditional written commitment can establish stability and regularity.

## Conclusion

The court concluded that Chapter 13 eligibility may be based on a cohabitant’s stable, long-term financial support when backed by a reliable history of payments and an unconditional, financially feasible commitment to fund the plan.


In re Murphy, 226 B.R. 601 (Bankr. M.D. Tenn. 1998)